American automotive Giants doesn’t seem to get it right when it comes to India. After the exit of General Motors and Harley Davidson, now time for Ford to exit India. Following accumulated operating losses of more than $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019 and a lack of growth in a difficult market, Ford is forced to end manufacturing operations in India and close plants at Sanand and Chennai. The decision will impact over 4000 employees.
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Jim Farley, Ford Motor Company’s president, and CEO, Ford Motor Company said, “As part of our Ford plan, we are taking difficult but necessary actions to deliver a sustainably profitable business longer-term and allocate our capital to grow and create value in the right areas. Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years, and demand for new vehicles has been much weaker than forecast.”
Approximately 4,000 employees are expected to be affected by the restructuring. Ford will work closely with employees, unions, suppliers, dealers, government, and other stakeholders in Chennai and Sanand to develop a fair and balanced plan to mitigate the effects of the decision, the company added.
After Ford India’s announcement, the automobile retail body Federation of Automobile Dealers Associations (FADA) urged the government to roll out the Franchisee Protection Act to protect the dealer community.
Commenting on Ford India’s announcement, FADA president Vinkesh Gulati said, “FADA has been requesting Government of India to roll out Franchisee Protection Act as due to its unavailability, Auto Dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia, Sweden and many other countries, where this law exists. After General Motors, Harley Davidson, Ford India is the 3rd biggest exit from Indian markets since 2017”.
“The Auto retail fraternity is shocked to hear another US Auto Major, Ford India’s announcement where it has said that it will shut down production with immediate effect. While trying to handle Dealer anxiety, Ford India President and MD, Anurag Mehrotra called me personally and assured me that they will adequately compensate dealers who continue to offer vehicle service to customers. Though this is a good beginning, it is not enough as there are–170 Dealers who in turn have–391 outlets and have invested ₹2,000 Crore for setting up their dealerships,” he added.
He further added, “While Ford India employs 4,000 people, dealerships employ around 40,000 people without displacing them from their home locations thus being continuously skilled and up-skilled all this while. Ford India Dealers currently hold about 1,000 vehicles which amount to about ₹150 Cr via inventory funding from reputed Indian banks. They also carry Demo Vehicles which are 100s in number. Moreover, Ford India also appointed multiple dealers until 5 months back. Such Dealers will be at the biggest financial loss in their entire life”.
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However, the company will retain its engine plant in Sanand, Gujarat and continue to service its products in India. Sources said that the company would continue to sell its marquee Ford Mustang and Ford Endeavour in India.
The Ford Business Centre and the product development centre that caters to the global operation will continue to operate. Even the engine plant that produces mid-size panther engines for global operation will continue to operate.
Ironically, when the sales of Ford is at an all-time low currently, the likes of other foreign carmakers are increasing steadily. Kia and Skoda are having excellent sales growth with the introduction of the latest models and upgrades. Fords sad demise could be attributed to the lack of exciting new models or lack of updates to the existing ones and a very poor marketing strategy.
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